Bank of America Corp. (NYSE: BAC) reported its Q4 2015 and full-year 2015 results before markets opened on Tuesday, January 19, 2016. The bank’s fourth-quarter profit rose 9%, primarily driven by its growth in consumer bank and trading revenue. The earnings call presented diluted earnings per share (EPS) for the quarter of $0.28 on revenue of $19.8 billion. In the same period a year ago, it reported EPS of $0.25 on revenue of $18.96 billion. Analysts expected the big bank to post earnings per share of 33 cents on revenue of $20.77 billion, according to a Thomson Reuters consensus estimate. For the full year, the bank reported EPS of $1.31 on revenues of $82.51 billion, compared with EPS of $0.36 on revenues of $85.12 billion in 2014. Consensus estimates called for EPS of $1.35 on revenues of $84.02 billion.

"Our results this quarter reflect our ongoing efforts to improve operating leverage while continuing to invest in our business. We increased net interest income, managed expenses tightly, and returned $1.3 billion in capital to our shareholders this quarter through common stock repurchases and dividends,” commented Paul Donofrio, Chief Financial Officer as the bank released its fourth-quarter 2015 results today.

Back in October 2015, we had a look at the Q3 2015 results of top US banks and observed a trend that big banks are cutting down on their branches while their mobile banking customers are increasing simultaneously. From Q3 2014 to Q3 2015, both Bank of America and Chase had seen an increase from 34% to 37% in the share of mobile banking customers as a percentage of all banking customers. In the same period, mobile banking customers at Bank of America increased by 13.5%. Wells Fargo had announced a similar increase in the percent of mobile banking customers from 36% to 38% from Q2 2014 to Q2 2015. The number of JPMorgan Chase branches declined by 132 in the preceding year. But its mobile banking users increased by a little more than 22%.

After Bank of America released it fourth-quarter earnings this morning, we observed that the bank continued with the same trend. The bank cut down 129 of its branches in 2015, now reduced to having a total of 4726 branches right now in the U.S. The bank also stated that it added 2.2 million mobile banking users in 2015, adding up to a total of 18.7 million mobile users today. The earnings call also stated the fact that consumers are not using mobile banking only for checking their balances and keeping a track of their expenses. The percent of total deposit transactions taking place via mobile has been increasing YoY. That number at Bank of America increased 15% in the fourth quarter of 2015.

Image Source: Presentation, Bank of America, 4Q15 Financial Results

Simultaneously, the cost of deposits reduced from $1.92 billion in 2014 to $1.77 billion in 2015. The reduction in cost of deposits may be partly because of technology upgrades as a whole but the numbers indicating an increase in lower-operational-cost mobile deposits shouldn’t be ignored.

As the number of mobile banking users have increased, the bank stated an increase in the number of online banking accounts too. The number of online banking accounts increased from 30.9 million in 2014 to 31.6 million in 2015. The bank also increased the number of ATMs by 204 in 2015.

Along with branches, the bank continued to cut down its expenses by reducing the number of full-time employees. The bank had 10,000+ fewer employees at the end of 2015 as compared to the end of 2014. However the bank is investing in its sales force. In 2015, the bank continued to hire more sales specialists. This looks like a smart decision on the bank’s part. As banks are facing stronger competition from FinTech companies and startups, they have to sell their products and services more aggressively before the new global FinTech takes over their market share.
LeftImage Source: Presentation, Bank of America, 4Q15 Financial Results

"The 2015 results were our highest earnings in nearly a decade, reflecting the work we’ve done to develop a straightforward operating model focused on responsible growth and doing more business with each customer and client. We saw solid customer activity in loan growth, deposits, and wealth management asset flows, and we returned more capital to our shareholders. As we build on this progress, we will continue to invest in the future and manage expenses,”, said Brian Moynihan, Chief Executive Officer, Bank of America.

Aboli is a marketing specialist and a FinTech analyst based in Charlotte, North Carolina. Her FinTech articles bring together her research skills and industry knowledge. Having been an observer of the technology space and the start-up ecosystem in the Silicon Valley for more than a year, she likes to analyze and write about exciting and innovative companies in the payments and commerce industry.

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